The Basics of Tax Resolution
Chad Dickinson • November 12, 2024
What is Tax Resolution?
Tax resolution is the structured process of negotiating with the IRS to manage and resolve tax debt issues like unpaid taxes, penalties, or disputes. Through various IRS programs, taxpayers can potentially reduce the amount owed or arrange manageable payment terms. For a comprehensive guide on these solutions, visit the IRS's official Tax Debt Assistance page.
We recommend always using a professional when communicating with the IRS, but this article shows you the process.
Importance of Addressing Tax Debt Early
- Avoid Escalating Penalties and Interest – Delaying payment leads to accumulating interest and penalties, significantly increasing the total debt.
- Prevent IRS Collection Actions – Addressing tax debt promptly helps avoid aggressive IRS actions, such as wage garnishments, bank levies, and property liens.
- Protect Your Credit – Unresolved tax debt can lead to liens, which may negatively impact your credit score and hinder future financial opportunities.
- Qualify for Resolution Programs – Early action allows you to explore options like installment agreements, penalty abatement, or an Offer in Compromise, potentially reducing the total debt.
- Reduce Financial Stress – Resolving tax debt sooner offers peace of mind, reducing financial uncertainty and preventing stress from prolonged tax issues.
Types of IRS Transcripts and Their Uses
The IRS provides several types of transcripts to assist taxpayers in managing their tax account and reviewing their tax history. This information is used when forming a resolution strategy:
- Account Transcript – Displays essential account data, including balance owed, payments, and adjustments after filing. This is helpful for understanding the status of a tax account and is available for the current and nine prior tax years.
- Record of Account – Combines both the Account and Tax Return Transcripts, giving a comprehensive view of tax and payment history, along with any adjustments. It’s accessible for the current and three prior tax years.
- Tax Return Transcript – Shows most line items from the originally filed tax return, useful for income verification on loan applications. It doesn’t reflect post-filing adjustments and is available for the current and three prior tax years.
- Wage & Income Transcript – Summarizes income reported to the IRS, such as Forms W-2, 1099, and 1098. Ideal for reconstructing income if records are missing, and available for the current and nine prior tax years.
These transcripts are essential tools for taxpayers needing to verify income, assess their IRS account status, or provide documentation for financial aid, loans, and other applications. Each type can be requested through the IRS’s Get Transcript service.
Overview of the Six-Year Lookback Rule for Filing
This overview provides the essentials of the Six-Year Lookback Rule and its significance in managing tax compliance.
1. What is the Six-Year Lookback Rule?
- The IRS generally requires taxpayers to file returns for only the last six years, even if more years are missing.
2. Purpose of the Rule
- This rule aims to streamline the filing process, allowing the IRS to collect necessary filings while avoiding backlogs of very old returns.
3. Exceptions to the Rule
- In certain cases, the IRS may request older returns if:
- There are outstanding audits.
- Significant unreported income from previous years is discovered.
- State tax returns may also have different lookback requirements.
4. Benefits of Compliance
- Filing the last six years’ returns can bring a taxpayer into "good standing" with the IRS, making it easier to qualify for resolution programs like installment agreements or offers in compromise.
5. Key Takeaway
- For taxpayers with missing returns, filing the last six years helps ensure compliance, potentially avoiding further penalties and enforcement actions.
Understanding the Collection Statute Expiration Date (CSED)
1. What is CSED?
- CSED stands for Collection Statute Expiration Date, the date by which the IRS must legally stop collection efforts on a tax debt, typically 10 years from the assessment date.
2. How CSED is Calculated
- The 10-year collection period starts from the assessment date of the tax debt, generally when the tax return is filed, or the IRS issues a tax assessment.
3. Why CSED Matters
- Knowing the CSED helps taxpayers plan, as the IRS cannot pursue collection actions (such as liens or levies) once this date has passed.
4. Events That Can Extend CSED (Tolling Events)
- Certain actions can "pause" or extend the CSED, including:
- Filing for bankruptcy.
- Submitting an Offer in Compromise.
- Requesting a Collection Due Process Hearing.
- Leaving the U.S. for an extended period.
5. Importance of Tracking CSED
- Tracking the CSED ensures taxpayers know when their liability may expire, allowing them to strategically decide on repayment or settlement plans.
Common Tax Resolution Options
1. Installment Agreement
- Allows taxpayers to pay their tax debt in monthly installments.
- Useful for those who can’t pay the full amount upfront but can make manageable monthly payments.
2. Offer in Compromise (OIC)
- A settlement option where the IRS agrees to accept less than the full amount owed.
- Taxpayers must demonstrate limited ability to pay to qualify.
3. Currently Not Collectible (CNC) Status
- Temporarily halts IRS collection efforts for taxpayers facing severe financial hardship.
- Debt remains, but active collections (like liens and levies) are paused until financial circumstances improve.
4. Partial Payment Installment Agreement (PPIA)
- A modified installment plan that allows lower monthly payments than a standard installment agreement.
- Generally requires a review of the taxpayer’s financial situation and may be reassessed periodically.
5. Streamlined Installment Agreement (SIA)
- Offers a quick approval process without extensive financial review, making it easier for eligible taxpayers.
- Allows manageable monthly payments for up to 72 months, reducing the stress of immediate full payment.
Each resolution option provides a pathway to manage tax debt based on the taxpayer's specific financial situation, allowing them to resolve or reduce their tax obligations with the IRS.
Steps to Begin the Tax Resolution Process
1. Gather All Tax Documents
- Collect recent tax returns, IRS notices, and income statements. Also, request IRS transcripts to understand the full scope of the debt and account activity.
2. Assess Financial Situation
- Evaluate current income, expenses, assets, and liabilities to understand financial standing. This assessment is crucial to determine eligibility for various resolution options.
3. Identify Available Resolution Options
- Based on your financial review, decide which option (Installment Agreement, Offer in Compromise, etc.) may be most suitable for managing the tax debt.
4. Complete IRS Forms
- Fill out necessary forms specific to the resolution option, such as Form 9465 for Installment Agreements or Form 433-A for financial disclosures in an Offer in Compromise.
5. Submit the Proposal to the IRS
- Send your completed forms and documents to the IRS and wait for their response. Timely and accurate submissions increase the chances of successful negotiation.
6. Respond to IRS Communications Promptly
- Stay responsive to IRS notices or requests for additional information, as delays could result in collection actions or denial of the proposal.
This process can be complicated and you should consult with a professional. Arch Tax has submitted thousands of successful resolutions with the IRS and we are available to give you a
free consultation. You can also call us at
(844) 556-3073.
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You trust your tax preparer with some of your most sensitive personal and financial information. But what happens if scammers target them—and end up with your data? Unfortunately, there’s a real scam going around that does exactly that. Here’s how it works and how you can protect yourself. The Scam in Action Criminals send fake emails to tax preparers, pretending to be from the tax software company the preparer uses. These emails ask the preparer to “verify” their Electronic Filing Identification Number (EFIN) —a number the IRS uses to identify legitimate tax businesses. The email tells them to send the EFIN information by fax. If the preparer falls for it, scammers can use that EFIN to file fake tax returns in clients’ names—claiming fraudulent refunds. Why This Matters to You If your preparer’s EFIN is stolen, scammers could: File a fake return using your personal information Claim your refund before you do Cause IRS delays and red flags on your account Make it harder and slower for you to get your real refund Signs of Trouble Here are a few warning signs that could mean your personal tax information was compromised: You try to e-file and the IRS says a return has already been filed under your name You get a letter from the IRS about a tax return you didn’t file You receive unexpected tax documents in the mail What You Can Do You can’t stop scammers from targeting tax professionals, but you can take steps to protect yourself: Ask your preparer how they protect client data — A good tax pro will use secure portals and never send sensitive info over unencrypted email. Consider getting an IRS Identity Protection PIN (IP PIN) — This is a 6-digit number that prevents anyone from filing a return in your name without it. Act quickly if you suspect fraud — Contact your tax preparer, report it to the IRS, and follow their steps to secure your account. Bottom Line The EFIN scam targets tax preparers, but it’s taxpayers who can suffer the consequences. By choosing a preparer who takes security seriously—and staying alert to signs of fraud—you can greatly reduce your risk. If you think your information may have been compromised or want help setting up extra IRS protections, contact Arch Tax today . We’ll help you secure your account and make sure your tax return is filed safely and accurately.
If you filed for an extension, your new tax deadline is October 15, 2025 . That gives you a little extra time — but not much — to get everything in order. Many taxpayers in your shoes consider hiring a professional to help finish the return. But here’s the catch: Not all tax preparers are created equal. Some are helpful pros. Others? Not so much. Choose the wrong one, and you could risk your refund — or worse, find yourself in a mess with the IRS. Here are the biggest red flags to watch out for when choosing a tax preparer: 1. They Promise Bigger Refunds Than Everyone Else If someone claims they can get you a “huge refund” before they’ve even looked at your documents, that’s a giant red flag. A legitimate preparer doesn’t make promises until they’ve seen the facts. 2. They Want Your Refund Deposited into Their Bank Account Never agree to this. Your refund should be deposited directly into your bank account — not theirs. This is a shady tactic some preparers use to skim fees or delay payments. 3. They Won’t Sign the Return By law, paid preparers must sign your return and include their Preparer Tax Identification Number (PTIN) . If they refuse? Walk away. 4. They Don’t Ask for Records or Receipts Good tax pros ask a lot of questions and request documentation. If someone is willing to prepare your return based only on a pay stub or vague guesses, that’s a problem. 5. They Base Their Fee on Your Refund Size A preparer who charges a percentage of your refund has a financial incentive to fudge the numbers. Reputable pros charge flat or hourly fees — not a cut of your return. 6. They Can’t Be Reached After Tax Season What happens if the IRS sends you a notice in December? Make sure you’re working with someone who’s available year-round — not just from January to April. What You Should Look For A valid PTIN IRS e-file access Transparency in pricing Willingness to review the return with you Available to answer questions even after October Final Tip: You Are Still Responsible No matter who prepares your return, you are legally responsible for what gets filed. Don’t sign a return you haven’t reviewed — and never sign a blank one. Need Help You Can Trust? At Arch Tax, we pride ourselves on transparency , ethics , and experience . We’ve helped hundreds of clients meet their tax deadlines — without the red flags. Let’s make sure your return gets filed right. Schedule a free consultation today!
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